Vidya A.G. v Sumner Group Holdings Ltd
| Jurisdiction | Jersey |
| Court | Royal Court |
| Judge | Sir Michael Birt,Jurats Ramsden,Hughes |
| Judgment Date | 28 November 2022 |
| Neutral Citation | [2022] JRC 259 |
In the Matter of an Application for a Creditors' Winding Up Pursuant To Article 157A of the Companies (Jersey) Law 1991
[2022] JRC 259
Sir Michael Birt, Commissioner, and Jurats Ramsden and Hughes
ROYAL COURT
(Samedi)
Companies — creditors' winding up
Companies (Jersey) Law 1991.
Companies (General Provisions) (Jersey) Order 2002.
Insolvency Act 1986.
Angel Group Limited v British Gas Trading Limited [2012] EWHC 2702 (Ch); [2013] B.C.C. 265
In Re a Company (No. 006685 of 1996) [1997] BCC 830.
HWA 555 Owners, LLC v Redox PLC SA [2022] JRC 181.
Representation of Harbour [2016] JRC 171.
Re Baltic Partners Limited [1996] JCA 075.
Foxholes Nursing Home Limited v Accora Limited [2013] EWHC 3712 (Ch).
Advocate M. L. A. Pallot for the Representor.
The Respondent was not represented.
On 10 October 2022, the Court granted the application of Vidya A.G. (“the Representor”) that Sumner Group Holdings Limited (“the Company”) be made the subject of a creditors' winding up pursuant to Article 157A of the Companies (Jersey) Law 1991 (“the Law”). What follows constitutes our reasons for that decision.
The order was made in the absence of any representative of the Company. Accordingly, we propose to begin by summarising the history of the proceedings and how this came about. We shall then consider the law in respect of applications under Article 157A, before turning to apply the law to the facts of the case.
Pursuant to Article 157A(2)(a), on 5 April 2022 the Representor served a statutory demand on the Company (which is a Jersey company) in respect of an alleged debt of US$120,000. The statutory demand was acknowledged (although the debt was disputed) by Ogier who were then instructed on behalf of the Company.
In the absence of payment of this sum, the Representor filed a Representation applying for a creditors' winding up and this came before the Samedi Court on 17 June. The Court remitted the proceedings to the Master for directions but said that the matter should be dealt with as if it were a cause de brievété. The Applicant sought to agree directions with Ogier but this did not prove possible and the Master fixed a directions hearing for 26 July. Shortly before that, directions were agreed and the Master made a consent order on 22 July. That directed the parties to attend before the Bailiff's Judicial Secretary within seven days to fix a date for the hearing with a time estimate of not more than one day. Advocate Pallot asserted that he had been of the view that half a day was sufficient but had agreed the longer time estimate in order to avoid a contested directions hearing. It did not prove possible to obtain a hearing date before this Court until 27 September.
The consent order made by the Master provided for the parties to file evidence on certain dates and these were broadly complied with. The order also required the parties to file skeleton arguments not later than 21 September. The Company did not comply with that direction.
On 2 September, Ogier informed Advocate Pallot that they were no longer instructed by the Company and since then the Company has been represented by its director, Mr David Sumner (“Mr Sumner”), with the assistance of Mr John Sumner, its chief financial officer.
On 22 September, the Company, through Mr John Sumner, applied for an adjournment of the hearing fixed for 27 September on the ground that Mr Sumner had contracted covid and was unfit to travel or represent the Company at the hearing. That application was supported by a medical certificate. The Commissioner agreed to vacate the date and his decision was communicated to the parties by email dated 22 September. In that email, the Commissioner emphasised the need for the matter to be dealt with promptly and fixed 10 October for the adjourned hearing. He directed that no further evidence be filed (the Master's order having been complied with) but ordered the Company to file its skeleton argument by 4 October. He made it clear that, if Mr Sumner was unable to appear on 10 October, there was time for another director to get up to speed so as to represent the Company at the hearing. He emphasised that, if no director appeared on 10 October, the Court would be likely to proceed in the absence of such a representative. These points were reflected in the Act of the Court dated 22 September.
On 6 October, Mr John Sumner emailed the Court to say that Mr Sumner was still very unwell and had been unable to advise the Company of all the pertinent information relating to the case. He therefore sought an adjournment of the hearing fixed on 10 October until a later date in October, by which time, he said, it was expected that Mr Sumner's health would have improved. He said that if the requested adjournment was not granted, the Company would be unable to file its skeleton argument or attend the hearing on 10 October. However, he asked the Court to take into account the existing evidence as providing sufficient information for the Court to ascertain that the Company vigorously disputed the alleged debt.
The Judicial Secretary replied the same day to say that, in the absence of a medical report, the Court would sit on 10 October and that if anyone wished to make an application to adjourn at that stage, they could do so. Mr John Sumner replied on 7 October to the effect that Mr Sumner would be requesting a medical report and that he expected to provide this to the Court on Monday 10 October.
When the Court sat on 10 October at 10am, nothing further had been heard from the Company. No medical report on Mr Sumner had been received and no one was present to represent the Company at the hearing. Having considered the history of the matter and the terms of the correspondence which had taken place, the Court decided to proceed in the absence of any representative of the Company. It had been made quite clear to the Company that this was likely to occur if a director was not present to represent the Company on 10 October.
The ability for a creditor to apply for a creditors' winding up was introduced into the Law in March 2022. Article 157A provides (so far as relevant) as follows:
“157A. Application for creditors' winding up by creditor
(1) A creditor may make an application to the court for an order to commence a creditors' winding up if the creditor has a claim against the company for not less than the prescribed minimum liquidated sum and:
(a) the company is unable to pay its debts;
(b) the creditor has evidence of the company's insolvency; or
(c) the creditor has the consent of the company .
(2) A company is deemed to be unable to pay its debts for the purposes of paragraph (1)(a) if:
(a) the creditor to whom the company is indebted in a sum exceeding the prescribed minimum liquidated sum then due has served on the company, by way of personal service, a statutory demand in the prescribed form on the company requiring the company to pay the sum so due; and
(b) the company has for 21 days after service of the statutory demand failed to pay the sum or otherwise dispute the debt due to the reasonable satisfaction of the creditor….”
(3) ..
(4) ..
(5) An application under paragraph (1) must be made in the form approved by the court and must be accompanied by an affidavit verifying the content of the form.”
Pursuant to Article 9 of the Companies (General Provisions) (Jersey) Order 2002, the prescribed minimum liquidated sum for the purposes of Article 157A(1) is £3,000. The Representor's claim therefore exceeds this amount.
However, in its evidence, the Company disputes that any sum is due to the Representor. The question therefore arises as to whether the Representor has a claim for ‘ a liquidated sum’ pursuant to Article 157A(1) and whether, for the purposes of Article 157A(2)(b) the Company has failed to “.. dispute the debt due to the reasonable satisfaction of the creditor..”
In considering what is meant by the expression “ dispute the debt due”, Advocate Pallot referred the Court exclusively to English authority. There was logic in this approach as the provisions introduced by Articles 157A – D are similar to longstanding provisions in the Insolvency Act 1986 (“ the 1986 Act”) of the United Kingdom. The relevant part of section 123(1) of the 1986 Act defines when a company is unable to pay its debts in the following terms:
“(i) If a creditor… to whom the company is indebted in a sum exceeding £750 then due has served on the company, by leaving it at the company's registered office, a written demand (in the prescribed form) requiring the company to pay the sum so due and the company has for 3 weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor.” [Emphasis added]
It is well established as a matter of English law that the emphasised expression requires the court to consider whether there is a substantial dispute about whether the debt is due. The position was helpfully summarised by Norris J in Angel Group Limited v British Gas Trading Limited [2013] BCC 265 at [22] in the following terms:
“22. The principles to be applied in the exercise of this jurisdiction are familiar and may be summarised as follows:
(a) A creditor's petition can only be presented by a creditor, and until a prospective petitioner is established as a creditor, he is not entitled to present the petition and has no standing in the Companies Court : Mann v Goldstein [1968] 1 WLR 1091.
(b) The company may challenge the petitioner's standing as a creditor by advancing in good faith a substantial dispute as to the entirety of the petition debt (or at least so much as will bring the indisputable...
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